Mid-Life Co-Investments
A Mid-Life Co-Investment strategy is a co-investment made in a portfolio company several years after its initial acquisition by the fund, in the middle of the investment’s life cycle. Unlike a traditional co-investment, which usually takes place alongside the initial acquisition of control of the company, a mid-life investment is made after progress has already been achieved in the company’s value under the fund’s ownership. In effect, the fund manager (GP) sells a stake in the company’s shares (usually a minority stake) to a new direct investor (or to an existing limited partner seeking to increase its exposure), while the fund continues to hold the remaining shares until the final exit. This model has gained relevance in recent years against the backdrop of lengthening holding periods and declining exit rates: in 2023, the average holding period of companies in North American private equity funds reached approximately 7.1 years (compared with 3–5 years traditionally).
The process differs fundamentally from the GP Led Secondary model, because in a classic secondary transaction the fund manager sells an asset (or several assets) to a new fund created specifically to continue holding them, sometimes with a “reset” of fund terms and with the approval of existing investors. By contrast, in a mid-life deal no new fund is created – the transaction is carried out within the ownership of the original fund and without changing the original investment terms. Likewise, compared with continuation funds, in which the entire asset is sold to a new fund, in a Mid-Life Co-Invest only part of the holding is sold to a third-party investor, and the GP remains involved as a significant shareholder in the asset (which ensures continued alignment of interests between the GP and investors).
It is important to emphasize that a Mid-Life Co-Investment is not a bridge loan, but rather a full equity investment in the company. The investor joins as a minority shareholder directly in the portfolio company (sometimes through a dedicated SPV), and shares the risk and upside with the existing fund until the exit. The GP will usually continue to lead the company and the final exit process, while the incoming investor is essentially passive (similar to a regular co-investment).
In summary, delayed exits, liquidity pressure, the rising cost of debt and the drive to optimize portfolios have led to accelerated growth in the Mid-Life Co-Investments market. According to Real Deals magazine (2025), the volume of such transactions has grown in recent years at an annual rate of approximately 10%–15%, and in 2023 the number of deals jumped by tens of percent compared with the previous year. In other words, the market “invented” this solution because it serves the shared interests of both sides: GPs get time and cash, and investors get a more attractive investment from a risk-reward perspective.
Disclaimer:
Nothing in this publication constitutes an offer to the public or an invitation to make any investment; it is a publication and presentation of general information only. The article and its contents rely on information, publications and data received from third parties, which were assumed to be accurate without the Company having reviewed or verified their accuracy. The information presented in this publication does not constitute investment advice/marketing or a substitute for investment advice/marketing tailored personally and specifically to each individual, taking into account their particulars, needs, financial situation, circumstances and investment objectives.
Sources:
1.James, R. (2021, September 1). The appeal of mid-life co-investments. Private Equity International. https://www.privateequityinternational.com/the-appeal-of-mid-life-co-investments/.
2.Bucak, S. (2025, July 24). Mid-life co-investments take off as GPs look to share the risk. Real Deals. https://www.harbourvest.com/insights-news/insights/harnessing-european-tailwinds-with-mid-life-co-investments/.